First time property buyers continue to be a rare breed – despite all attempts to encourage and cajole them into the housing market.
According to specialist mortgage advisor Ian Bavey it’s not surprising that so many young and not-so-young first timers are still struggling to gain that all too elusive first foothold on the property ladder.
“This group of potential buyers is probably the most important as far as the long-awaited recovery of the Welsh housing market is concerned,” said Ian, mortgage and protection specialist at Newport-based Seer Green Financial Planning.
“Without the first timers entering the market you are left with a stagnating property sector, so it is key that they are given as much opportunity as possible to get the key to the door of their own first home.
“It is certainly a lot tougher than it used to be to source a home loan and buy a first time property, but there are a number of key ways in which you can prepare early and put yourself in the best position possible to achieve that mortgage acceptance.”
Here are Ian’s Top 10 Tips to securing and safeguarding a first time buyer’s mortgage:
- Start saving early for that all-important deposit. You will need a minimum of 10 per cent of the purchase price, and proof of regular long-term savings will also help.
- Earn a positive credit rating. You will need to prove you are not a credit risk to get a mortgage, so if you have a bank overdraft make sure you manage it successfully, or a credit card make sure that that you make payments on time each month by setting up direct debits to make the minimum payments. Also, wherever you are living now you should make sure you are registered on the voters roll at that address.
- Being in work is pretty much a must, but having a history of stable employment is also key to proving you could be a reliable borrower.
- Target affordable properties. Be sensible and do not overstretch yourself. It’s too easy to commit to a large loan and leave little in reserve for everyday spending. The risk is you’ll end up a prisoner in your own home.
- Mortgage rates may look to be at an all-time low, but don’t necessarily chase the headline rates. They may look tempting, but arrangement fees and other costs may mean that these work out more costly than other products available. Always seek the help of a specialist independent mortgage advisor to choose the loan that’s best for you.
- When you have secured your first home loan, make sure you can maintain all your payments on time – not just the mortgage, but all the other bills, household spending, etc.
- Life insurance cover and critical illness insurance is highly recommended when you take out your mortgage to ensure your dependents ones are not left without a roof over their heads if you die or are not able to pay the your mortgage due to ill health.
- Organise your finances with a budget – and stick to it. Have separate accounts for household expenses, including your mortgage, council tax, power bills etc, and set up another to cover everyday spending like food, clothes and going out.
- Seriously consider taking out income protection insurance to replace your income in the event of ill health or unemployment. It’s a financial safety net in these times of uncertain job security.
- And, finally, speak with an independent advisor to regularly review your mortgage, loans, investments, insurances and pensions.
Leading financial planning specialists Seer Green Financial Planning are experts in the field of mortgages. Contact Ian Bavey, mortgage and protection specialist, on 01633 816522; www.seer-green.com